Getting the right hemp insurance is crucial for businesses in the evolving hemp industry. With the 2018 Farm Bill, more entrepreneurs are entering this market. This guide explores the nuances of hemp insurance and provides valuable resources for business owners.
Table of Contents:
- Why Hemp Businesses Need Insurance
- Types of Hemp Insurance Coverage
- Other Important Coverage to Consider
- How to Choose the Right Insurance for Hemp Businesses
- FAQs about Hemp Insurance
- Conclusion
Why Hemp Businesses Need Insurance
The hemp industry faces unique risks that standard business insurance may not cover. These include crop failures and product liability concerns.
Product Liability Insurance: Protection for Hemp Businesses
What is Product Liability Insurance?
Product liability insurance protects your business if a customer reacts adversely to your product. It is essential for hemp businesses, from growers to distributors to hemp product manufacturers.
Real-Life Scenarios
- A customer or large group of customers has an allergic reaction to a new hemp-based cosmetic product, and lawsuits follow.
- A hemp-based business manufactures and distributes CBD oil products, but the sources of the hemp are not adequately tested for purity and potency. Unknown to the manufacturer, the source material is contaminated with harmful levels of heavy metals, which leads to bodily injury claims from customers using the oil.
Why is Product Liability Insurance Important?
It protects your business from financial losses due to product-related claims or lawsuits. Without this insurance, your business could be held liable for damages, legal fees, and other expenses paid out of pocket.
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Types of Hemp Insurance Coverage
Different hemp businesses have different insurance needs. A small hemp farm has different requirements than a large CBD manufacturer. Let’s explore typical coverage options available through an insurance agency.
Product Liability Insurance
This protects your business if a product causes harm. For example, if a customer has an allergic reaction to your hemp product, this insurance can help cover expenses related to medical bills and legal action. It offers crucial insurance protection for any product you manufacture, sell or distribute.
Crop Insurance
Protecting your hemp crop against natural disasters, pests, and disease is vital. This insurance covers financial losses due to events impacting your crop’s yield. The Noninsured Crop Disaster Assistance Program (NAP) offers one option. This provides necessary financial protection against loss for hemp growers. Crop insurance for hemp is like other insurance types that protect crops from threats, including industrial hemp crop damage due to severe weather.
Property Insurance
This covers physical assets like buildings, equipment, and inventory. It protects against events such as fires, theft, or vandalism. Property insurance secures key investments, like a processing plant or retail store. This falls under personal insurance and property insurance categories as needed by your cannabis license. Property insurance is a core business insurance product.
General Liability Insurance
General liability insurance protects your business from common risks, such as a slip-and-fall accident at your facility. It also covers medical costs and legal fees. This coverage is essential for hemp-related business owners.
Other Important Coverage to Consider
Workers’ Compensation Insurance
This insurance provides medical benefits and lost wages to employees injured on the job. Workers’ compensation is mandatory in most states. Workers’ compensation protects employees and employers.
Commercial Auto Insurance
Commercial auto insurance is needed if your company owns, leases, or operates vehicles for business purposes. This policy will protect you, the company, and employees using vehicles for work from liability claims if they’re involved in an accident. It can also include protection for your cars or trucks from physical damage.
How to Choose the Right Insurance for Hemp Businesses
The right hemp policy depends on your operation. Consider business size, product type (CBD, fiber, grain), revenue, location, and operational risks. Your product liability insurance will vary significantly based on your specific products, whether you’re dealing with CBD edibles versus topical lotions, hemp fabrics or industrial hemp. Understanding your product liability insurance coverage is crucial.
Distinguish between CBD and hemp products. CBD and industrial hemp have different legal and regulatory guidelines. Consult an experienced insurance broker, like The Coyle Group who specializes in the hemp and cannabis industry, and who have a strong understanding of cannabis distribution, manufacturer business practices, and related services.
The Coyle Group can offer tailored advice for your business. Our Cannabis Insurance Practice Leader has over 10 years of experience working with hemp, CBD, and cannabis-related businesses and a depth of knowledge in this industry. Working with the right partner greatly simplifies hemp business insurance.
FAQs about Hemp Insurance
How much is hemp insurance?
Insurance costs depend on various factors, including coverage type (product liability, crop, property), location, revenue, prior claims, and even the product category. These considerations are also important when securing insurance coverage for a cannabis laboratory.
For example, depending on the risks involved, CBD and dispensary insurance rates will differ significantly from those of industrial hemp product manufacturers. An appropriate risk management strategy can affect rates positively.
How to get Hemp Insurance?
Most insurance agencies and brokers wouldn’t know where to start to insure a hemp-related business. That’s why working with a specialist will significantly increase your chances of getting the proper protection at a competitive premium.
There are only a handful of insurers that operate in this space, and The Coyle Group represents or is connected to all of the major players, assuring that you will be well represented in the marketplace.
What is CBD insurance?
CBD insurance covers risks related to cannabidiol products, which are derived from cannabis with less than 0.3% THC. It’s often grouped with hemp insurance. The same specialized insurers handle these intertwined markets. CBD insurance typically includes product liability (crucial due to potential adverse reactions), property insurance for storage/processing, and sometimes crop insurance.
For CBD manufacturers, cannabis extraction insurance becomes an important consideration. Coverage for extraction can help cannabis companies offset potential loss.
Conclusion
It is crucial to partner with experts at The Coyle Group, which specializes in hemp and cannabis companies and provides valuable coverage guides.
Tailored insurance plans and appropriate coverage guides for hemp cultivators and hemp distribution insurance play an important role. The right coverage extends to your employees as well, protecting employees via worker’s compensation options.
It is essential to find a partner experienced in manufacturer business insurance, hemp cultivation insurance, and workers’ compensation coverage for cannabis extraction or cultivation operations.
The Coyle Group can help protect hemp-related businesses with appropriate insurance and provide information about event insurance for businesses participating in trade shows and promotional hemp and cannabis events. If you are involved in cannabis delivery or distribution, be sure your chosen insurance partner specializes in that niche.
Whether you’re looking to secure the right coverage, fill gaps in your current policies, or get expert advice, we’re here to help. Contact us today for a no-pressure consultation and see how we can tailor insurance solutions to fit your business’s unique needs. To get started, click the “Get Insured Now” button above.
Gordon Coyle is The Coyle Group’s CEO and a seasoned business insurance expert with over 40 years of experience and four professional designations. He specializes in helping businesses with 25 to 1,000 employees navigate the complexities of risk and insurance, from cyber insurance to D&O protection and everything in between. Gordon is passionate about providing tailored solutions that protect businesses, their owners, and their futures.
Need guidance on your business insurance? Contact Gordon for help!